At Whole Foods, Low Prices Mean Trouble in Aisle 2

2/14/2013 9:11AM

WSJ's Annie Gasparro explains Whole Foods' efforts to reign in prices and shed its reputation as an over-priced grocer caused it to take it on the chin in its latest earnings report. Photo: Getty Images.

This transcript has been automatically generated and may not be 100% accurate.

... the the ... in attempting to offer more portable grocery and bought is costing them planning to borrow it here to tell us ... all the details about this high and the grocer and their latest anti anything to be here ... so-called is is trying to appeal to a broader ... customer so ... what how with that strategy working for them at this point ... well they've they've successfully inherited their price gap between their pressure easy and ... the average supermarket ... that day the problem that the face now is that it's hurting profit margins ... so what what they needed to know when a lower price is way ... bring in ... enough customers to make that four or the difference in profit margin ... but they just weren't able to do that the last quarter they actually said that they didn't meet their goal for attracting customers and what is that barrier that their fee in there they're finding is I'm keeping those customers from coming in as it is ... the reputation of all this has is being ... expensive ... it's really hard to change your brain and he now ... and I'm ... so that they have is that ... the competition for fresh and organic food is really increasing ... you know you Gautier locals in America and now they have a whole aisle that's all or DNA natural and ... found that competition is just really really increasing around the country ... so what are they gonna do going forward they can continue on this that strategy or a NetApp contract you know some of Wall Street analysts actually uber ... telling them yesterday on the conference call that day ... maybe they shouldn't keep churning didn't answer that and ... whether they knew that made the stock so popular is that it's not the sort of hybrid so ... I'd I think that they're making the right to is that ... they said that they think that in the long term ... you know they only have like ... less than four hundred stores and they wanna get two thousand when they ... sell in order to do that the new deal to go and take markets where the demographic isn't willing to spend forty dollars ... on one meals worth of Bernstein petition secondly they they think that long-term they really need to stick with the defendant ... to lower prices with a bit as to whether that the bulk of the recession quite London the high-end customers to work as hard hit did continued to shop there so ... is it isn't a chance to can it continue being that high priced organic at the end of person for the high-end as well as bringing in some of the broader constituency they wanna reach ... out and that one of the things they've notices that their new customers which I this ... new demographic I spending a lot less at the stores they and ... what their core customers are ... I'm so that's one challenges the tighter tracking customers and the other one like you mentioned is ... just the economy from even the ... ones resilience adding customers that ... we talk to them are willing to spend the money ... eight ... they want ... to be seen with the whole things back in the one that brand in Japan ... they also ... need the are starting to feel uncertain about the economy like ... you're out of recession ever really confident that it's been a long time and things ... are still really sleepy now lot of people are still having a tough time in when the fray saying they able to ... sort of how little I'd get there or I'd be adding trying to keep those prices lower even the media for their costs are rising ... right that's another thing that they are really struggling with an almost over I'm hoping to get a better job at ... it several problem commodity costs are really high and ... consumers don't wanna spend a lot of money you can make your groceries more expensive than it would be to keep out ... that in ... that is what they're thinking in in them ... that dude ... on those restaurants are really focusing on the year when ... I mean you have ... all of the remaining ... staff doing line twelve dollar deals for three courses is like how do you compete with that ... as a cinema Cape May settling in thing in the top of that we have a conversation about its really hard to change or brand ... is a good idea to change the meaning in it been so successful with that Granny takes a lot to build the brand ... is that talented they beat Dallas in in in essence ... damaging their brand by trying to change it so much ... a lot of people are concerned ... that a ... lot of holes this is really ... known for being with us listened ... and when they're going and actually liked I knew when to smaller markets ... I'm suburban area is ... and that that takes away from that ... CD go where ... the CEO of shopping at their stores so ... it couldn't really have an impact they are hoping that ... the average suburban mom in Ghana and want to shop there and ... that that's can email capturing the day they lose by changing the screen image that they have a lot more room to grow in ... any deal on a lot of customer loyalty that something that they've got a really good job and ... I will thank